What’s in a word?

In the Italian language the word “perché” translates to mean both “why” and “because” in English.  In Greek the word “love” translates out into four separate terms to cover a broad span of emotions ranging from “irresistible dedication” down to “just above like”.  And for the Chinese the battle rages on between linguists as to whether or not the symbol for “crisis” is really a combination of the symbols for “danger” and “opportunity”.

Thank goodness Wills prepared in Australia are written in English – right?  Well, not always – the English language has its fair share of traps as well.  If a Will has been poorly drafted with ambiguous language then the executors may be left with no choice but to apply to the Supreme Court for guidance in the interpretation of the Will.  This is an expensive and lengthy exercise, which can be avoided by executing a carefully drafted Will.

Continual adjudication on this topic over the years has resulted in the courts developing various rules now called “rules of construction”.  These rules of construction will be used by courts in any current dispute where the words used by the Willmaker are unclear.  Consequently, it becomes very important to have these Rules in mind when a Will is being drafted to make sure the correct wording is used and future court battles avoided.  Here are a few:

• Will speaks from date of death

Even if a Will had been prepared decades before, when it comes to interpreting what a testator had intended a Will to say, the courts will interpret the words as if the testator had written them only in the moments before his or her death.

For example, a testator may gift “my car to my daughter Rebecca”.  At the time of executing the Will the testator owned a Toyota Corolla.  However, a few years later the testator sold the Corolla and purchased a BMW and later passed away.  In this example, Rebecca will receive the BMW, even though the deceased did not own the BMW at the time of executing the Will.

Conversely, a testator may gift “my Toyota Corolla to my daughter Rebecca”.  If the Corolla is later sold so that the testator did not own a Toyota Corolla when he or she passed away, the gift to Rebecca will fail.  This is the case even if the testator sells the Corolla and leaves the sale proceeds in a bank account.  The sale proceeds in the bank will fall into the residue of the estate and will not pass to Rebecca.

• Assets subject to debt

The gifting of assets which are subject to a debt is another problem area.  For example, if at the date of the deceased’s death his/her house is subject to a mortgage.  The beneficiary that is to take the house will also be liable for the mortgage attached.  This rule also applies to personal property, such that the beneficiary, who is to take an item of property which is subject to a legal or equitable charge, like a hire purchase on a car, will also be liable for the charge so attached.  However, in a situation where a particular asset might have been purchased with borrowed monies, like for instance, furniture subject to a store credit card or something of this sort, the liability will not attach to the asset because it is not charged against the asset and therefore the asset will go to the named beneficiary debt free and the estate will have the burden of paying off the debt from the other remaining funds held in the estate.

A review of the Will should be conducted every few years, or when a person’s circumstances change, to ensure that gifts intended to pass to a particular beneficiary will in fact pass to that beneficiary.  Further, if it is intended that a gift is to pass free of the mortgage or charge, or otherwise subject to a debt or responsibility that is not formerly charged against the asset then this must be specially set out in the Will.

Charmaine Feggans is a Solicitor employed with Zande Law, Solicitors specialising in the drafting of Wills and administration of Deceased Estates.  Please feel free to review our firm and staff profiles at www.zandelaw.com.au

The information in this article is merely a guide and is not a full explanation of the law.  This firm cannot take responsibility for any action readers based on this information.  When making decisions that could affect your legal rights, please contact us for professional advice.